Mexico is concerned that the US bans Asian components in cars

Washington. The Mexican government yesterday expressed its concern about the proposal by the administration of the president of the United States, Joe Biden, to prohibit, for reasons of national security, the use of Chinese software and hardware in vehicles circulating in that country.

The Ministry of Economy indicated in a document to the Department of Commerce that the proposal could have a substantial impact on Mexico’s automotive industrywell raises potential trade barriers, disruptions to supply chains, increased production costs, and potential risk of reduced direct and indirect employmenthe stated.

Groups of automobile manufacturers and technology companies in another document asked the United States government to change the rule and postpone its entry into force.

The proposal is a significant tightening of restrictions imposed by the United States on Chinese vehicles, software and components, and would effectively ban the importation of cars from that country, even if they were assembled in Mexico.

In September, the Biden administration raised tariffs on Chinese imports, including a 100 percent tariff on electric vehicles, as well as those vehicles’ batteries and key minerals.

Mexico said this proposal could violate North American free trade rules and lead to an increase in production costs due to the change of suppliers of auto parts and components in the supply chain.

The Commerce Department had no immediate comment.

The proposal would make software bans effective in 2027 models. The hardware ban would take effect in the next decade or in January 2029.

The Alliance for Automotive Innovation, which represents General Motors, Toyota, Volkswagen, Hyundai and other major automakers, called for at least one more year to meet the hardware requirement.

The Consumer Technology Association asked that both deadlines be extended by two more years, as did Honda Motor, in order to Carry out crucial testing, validations, and necessary contract updates.

The Commerce Department hopes to finalize the proposal by January 20. The rules cover all road vehicles, but exclude agricultural or mining vehicles, as well as drones and trains.